Feb. 12 (Bloomberg) -- The deepening global financial crisis is the most immediate national security concern for the U.S., threatening the stability of governments and making it difficult for allies to meet their military obligations, the top U.S. intelligence official said.

“Time is probably our greatest threat. The longer it takes for the recovery to begin, the greater the likelihood of serious damage to U.S. strategic interests,” Director of National Intelligence Dennis Blair said today.

Blair, a retired admiral who was confirmed last month for his new job, testified before the Senate Intelligence Committee about security threats to the U.S. Those include al-Qaeda and increasing attacks by the Taliban on U.S. forces in Afghanistan.

Statistical models show that governments are likely to succumb to public unrest if economic crises continue over a one- or two-year period, Blair said.

Countries in sub-Saharan Africa and Latin America as well as those in the former Soviet Union don’t have sufficient cash reserves and credit for a prolonged fiscal slowdown, he said.

Still, the U.S. could use the crisis to overhaul its financial system and exert leadership within organizations such as the G-20, Blair said.

The al-Qaeda terrorist organization, which was the No. 1 security threat, has been weakened by mounting criticism in the Islamic world of its methods as well as by U.S. and allied attacks on its leadership in the Pakistani tribal region, he said.

‘Less Capable’

Also, the continuing decline of al-Qaeda’s branch in Iraq has hurt the group, Blair said. “Al-Qaeda today is less capable and effective than it was two years ago,” he said. Contrary to some media reports, though, al-Qaeda isn’t on the verge of defeat, Blair said.

Blair talked about continued progress in Iraq’s security situation and the potential for a confrontation between Israel and Iran.

He said he doubted that the Iranian presidential election in June would affect Iranian policy on developing nuclear weapons. “I don’t believe that a change of a single individual would change in and of itself fundamental Iranian policy,” Blair said.

Iranian officials have denied U.S. allegations that they are developing a nuclear program for weapons rather than energy. Israeli leaders have said they won’t tolerate a nuclear-armed Iran.

Blair also said that low oil prices have made it harder for Iran and Venezuela to fund groups and efforts counter to U.S. security interests.

Yet if the price decline continues, it could slow an economic recovery by forcing oil companies to end drilling projects that will be necessary when demand increases, he said.

To contact the reporter on this story: Jeff Bliss in Washington jbliss@bloomberg.net

Last Updated: February 12, 2009 16:45 EST