No. 1 Threat: Cyber Attacks

Cyber attacks against critical infrastructure now constitute the No. 1 threat to the nation, the top U.S. intelligence official said yesterday, in an annual assessment that bumped last year's most serious challenge -- the global economic crisis -- to the No. 2 slot.

Director of Central Intelligence Dennis Blair, in testimony to the Senate Select Committee on Intelligence yesterday, said that while last year's fears of a global depress have been tempered by “unprecedented policy" responses by government and central banks -- which pumped cash into their economies -- risks of new economic challenges lurk as governments now decide how and when to withdraw stimulus measures.

“Exit strategy missteps could set back the recovery, particularly if inflation or political pressures to consolidate budgets emerge before household consumption and private investment have begun to play a larger role in the recovery,” Blair said in his testimony.

The implications for defense budgets around the world?

The financial crisis has increased industrial country budget deficits and efforts to reduce those deficits are likely to constrain European and Japanese spending on foreign priorities -- such as supporting efforts to stabilize Afghanistan, assisting poorer countries in coping with climate change and reducing C02 emissions, and addressing humanitarian disasters -- and spending on their own military modernization and preparedness for much of this decade.