By Tabassum Zakaria
WASHINGTON (Reuters) - Iran is keeping the option open to develop a nuclear weapon but U.S. intelligence agencies do not know whether it will eventually decided to build one, the U.S. intelligence chief said on Tuesday.
New U.S. sanctions imposed over Iran's nuclear program were likely to have a greater impact than previous ones, but were not expected to lead to the downfall of Tehran's leadership, Director of National Intelligence James Clapper said in prepared testimony on the annual worldwide threat assessment for the Senate intelligence committee.
"We assess Iran is keeping open the option to develop nuclear weapons, in part by developing various nuclear capabilities that better position it to produce such weapons, should it choose to do so," Clapper said. "We do not know, however, if Iran will eventually decide to build nuclear weapons."
Iran is expanding its uranium enrichment capabilities, which can be used for either civil or weapons purposes, he said.
"Iran's technical advancement, particularly in uranium enrichment, strengthens our assessment that Iran has the scientific, technical, and industrial capacity to eventually produce nuclear weapons, making the central issue its political will to do so," Clapper said.
"These advancements contribute to our judgment that Iran is technically capable of producing enough highly enriched uranium for a weapon, if it so chooses," he said.
President Barack Obama signed into law December 31 sanctions on Iran's central bank. The new U.S. sanctions will have a greater impact on Iran because the Central Bank of Iran handles a large volume of foreign bank transactions and receives the revenue for the roughly 70 percent of Iranian oil sold by the National Iranian Oil Company, Clapper said.
"Despite this, Iran's economic difficulties probably will not jeopardize the regime, absent a sudden and sustained fall in oil prices or a sudden domestic crisis that disrupts oil exports," he said.
Iran has sought to "exploit the Arab Spring but has reaped limited benefits, thus far," the testimony said. Its biggest regional concern is Syria where a change in leadership would be a major strategic loss for Tehran.
Nearly a year into the unrest, the situation in Syria is unlikely to be resolved quickly, Clapper said.
"Both the regime and the opposition are determined to prevail, and neither side appears willing to compromise on the key issue of President Bashar al-Assad remaining in power."
The Arab Spring uprisings fueled concern among Chinese leaders that similar unrest could undermine their rule, prompting Beijing to launch its harshest crackdown on dissent in at least a decade, Clapper said.
At the same time, worries about the global economy helped heighten Beijing's resistance to external pressure and suspicion of U.S. intentions, he said.
China continued a policy of permitting modest appreciation of the renminbi, "although it remains substantially undervalued," the testimony said.
In North Korea, it is still early to assess the extent of the new leader, Kim Jong-un's authority, Clapper said. Senior North Korean leaders will probably remain cohesive at least in the near term to prevent instability and protect their interests, the testimony said.
U.S. intelligence agencies judge that North Korea tested two nuclear devices, in October 2006 and May 2009, which "strengthen our assessment that North Korea has produced nuclear weapons," Clapper said.
"The Intelligence Community assesses Pyongyang views its nuclear capabilities as intended for deterrence, international prestige, and coercive diplomacy. We judge that North Korea would consider using nuclear weapons only under narrow circumstances," he said.
Espionage by China, Russia, and Iran will remain top threats to the United States in coming years, Clapper said. Russia and China are aggressive and successful in economic espionage against the United States, and "Iran's intelligence operations against the United States, including cyber capabilities, have dramatically increased in recent years in depth and complexity."
Foreign intelligence services have targeted the unclassified and classified computer networks of U.S. government agencies, businesses, and universities. "We assess that many intrusions into U.S. networks are not being detected," he said.
The next two to three years will be a "critical transition phase" for the terrorism threat facing the United States, particularly from al Qaeda and like-minded groups, Clapper said.
Al Qaeda's leadership is expected to become more decentralized, with the core group formerly led by Osama bin Laden diminishing in operational importance. Counterterrorism efforts to keep pressure on the group could lead to fragmentation of the movement within a few years, he said.
Core al Qaeda is in decline and with the death of Osama bin Laden, "the global jihadist movement lost its most iconic and inspirational leader," Clapper said. Most members find al Qaeda's new leader, Ayman al-Zawahri, less compelling and "will not offer him the deference they gave bin Laden."