Defeating terrorists and improving U.S. intelligence gathering (search) requires a mix of old-school spy methods and a less tangible tool: the spread of democracy and freedom around the globe, intelligence officials said Wednesday.

A six-month report card on the revamped intelligence operation lists the promotion of democracy as part of its most pressing objective of "defeating terrorists at home and abroad."

The unclassified National Intelligence Strategy report (search) lays out goals for the continued restructuring of the nation's vast and compartmentalized system for seeking and analyzing information in the wake of intelligence failures in Iraq.

"Our feeling is that we must change the way we do business," National Intelligence Director John Negroponte (search) told reporters. "We think that this document helps respond to these new expectations."

Congress established Negroponte's office this year to oversee the 15 agencies that make up the U.S. intelligence community. Wednesday's report was part of an effort to make all 15 agencies cooperate and share intelligence, many for the first time.

Negroponte is in charge of policing that collaboration, cutting out bureaucratic overlap and generally rethinking intelligence strategies that largely grew out of the Cold War (search).

"This new approach to national intelligence represents a far-reaching reform of previous intelligence practices and arrangements," the report said.

While recognizing that various agencies had their own way of doing things, "all cultures either evolve or expire and the time has come for our domestic and foreign intelligence cultures to grow stronger by growing together," the report said.

Another long-range change involves a shift in focus from relying heavily on expensive, whiz-bang hardware such as spy satellites. Old-fashioned "human intelligence," or information gathered by people, and the general promotion of democracy and open societies are now prominent goals.

"We have learned at our peril that the lack of freedom in one state endangers the peace and freedom of others and that failed states are a refuge and breeding ground of extremism," the report said.

In March, a bipartisan commission issued a scathing report on the intelligence structure's ability to understand and protect against the threat of weapons of mass destruction (search).

President Bush asked for the commission's review in early 2004 after it became clear that prewar intelligence on Iraq (search) was flawed. After a 13-month investigation, the commission concluded the intelligence community was "dead wrong" in almost all of its prewar findings on Iraq's arsenal.

Bush also asked the commission to study the sweeping intelligence reform law that Congress passed in December, creating the new intelligence chief.

The commission's findings followed numerous reforms already ordered by Congress, the White House and within government agencies themselves since the attacks of Sept. 11, 2001, and the botched Iraq intelligence estimates.

They also follow a number of bruising critiques of the CIA, FBI, Defense Department and other elements of the intelligence structure.