Pentagon Plan Would OK Bets on Terrorism

Senators Say Pentagon Plan Would Allow Betting on Terrorism,
Assassinations.

http://abcnews.go.com/wire/Politics/ap20030728_1660.html

July 28th, 2003
By KEN GUGGENHEIM
Associated Press Writer, Washington

The Pentagon is setting up a commodity-market style trading system in
which investors would be able to bet on political and economic events in
the Middle East including the likelihood of assassinations and terrorist
attacks.

Two Democratic senators said Monday they want the project stopped before
investors begin registering this week.

The Pentagon office overseeing the program said it was part of a research
effort "to investigate the broadest possible set of new ways to prevent
terrorist attacks." It said there would be a re-evaluation before more
money was committed.

The Policy Analysis Market <http://www.policyanalysismarket.org/pam_
home.htm> is intended to help the Pentagon predict events in the region
based on investors' information or analyses.

A graphic on the market's Web page showed hypothetical futures contracts
in which investors could trade on the likelihood that Palestinian leader
Yasser Arafat would be assassinated or Jordanian King Abdullah II would
be overthrown.

Although the Web site described the Policy Analysis Market as "a market
in the future of the Middle East," the graphic also included the
possibility of a North Korea missile attack.

That graphic was apparently removed from the Web site hours after the
news conference by Sens. Ron Wyden of Oregon and Byron Dorgan of North
Dakota criticizing the market.

"The idea of a federal betting parlor on atrocities and terrorism is
ridiculous and it's grotesque," Wyden said.

Dorgan described it as useless, offensive and "unbelievably stupid."

"Can you imagine if another country set up a betting parlor so that
people could go in ... and bet on the assassination of an American
political figure, or the overthrow of this institution or that
institution?" he said.

According to its Web site, the Policy Analysis Market would be a joint
program of the Pentagon's Defense Advanced Research Projects Agency,
known as DARPA, and two private companies: Net Exchange, a market
technologies company, and the Economist Intelligence Unit, the business
information arm of the publisher of The Economist magazine.

DARPA has received strong criticism from Congress for its Terrorism
Information Awareness program, a computerized surveillance program that
has raised privacy concerns. Wyden said the Policy Analysis Market is
under retired Adm. John Poindexter, the head of the Terrorism Information

Awareness program and, in the 1980s, a key figure in the Iran-Contra
scandal.

In its statement Monday, DARPA said that markets offer efficient,
effective and timely methods for collecting "dispersed and even hidden
information. Futures markets have proven themselves to be good at
predicting such things as elections results; they are often better than
expert opinions."

The description of the market on its Web site makes it appear similar to
a computer-based commodities market. Contracts would be available based
on economic health, civil stability, military disposition and U.S.
economic and military involvement in Egypt, Iran, Iraq, Israel, Jordan,
Saudi Arabia, Syria and Turkey.

Contracts would also be available on "global economic and conflict
indicators" and specific events, for example U.S. recognition of a
Palestinian state.

Traders who believe an event will occur can buy a futures contract. Those

who believe the event is unlikely can try to sell a contract. The Web
site does not address how much money investors would be likely to put
into the market but says analysts would be motivated by the "prospect of
profit and at pain of loss" to make accurate predictions.

Registration would begin Friday with trading beginning Oct. 1. The market

would initially be limited to 1,000 traders, increasing to at least
10,000 by Jan. 1.

The Web site says government agencies will not be allowed to participate
and will not have access to the identities or funds of traders.

The market is a project of a DARPA division called FutureMAP, or "Futures

Markets Applied to Prediction." FutureMAP is trying to develop programs
that would allow the Defense Department to use market forces to predict
future events, according to its Web site.

"The rapid reaction of markets to knowledge held by only a few
participants may provide an early warning system to avoid surprise," it
said.

It said the markets must offer "compensation that is ethically and
legally satisfactory to all sectors involved, while remaining attractive
enough to ensure full and continuous participation of individual
parties."

Dorgan and Wyden released a letter to Poindexter calling for an immediate

end to the program. They noted a May 20 report to lawmakers that cited
the possibility of using market forces to predict whether terrorists
would attack Israel with biological weapons.

"Surely such a threat should be met with intelligence gathering of the
highest quality not by putting the question to individuals betting on an
Internet Web site," they said.

Wyden said $600,000 has been spent on the program so far and the Pentagon

plans to spend an additional $149,000 this year. The Pentagon has
requested $3 million for the program for next year and $5 million for the

following year.

Wyden said the Senate version of next year's defense spending bill would
cut off money for the program, but the House version would fund it. The
two versions will have to be reconciled.
         ___

On the Net:

    Policy Analysis Market:
         http://www.policyanalysismarket.org

    DARPA's Future Map
         http://www.darpa.mil/iao/FutureMap.htm

Copyright 2003 Associated Press

*****
Courtesy of Richard Diamond

Larry Morningstar
The Socio-Political Report
WatersOfLife@mac.com
http://www.freeyourself.net/Prosperity4U
http://www.gmtiassociate.com/larrymorningstar.htm


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