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The war on terror has come to this: the Pentagon is setting up a commodity-style market to use investors - putting down real money - to help its generals predict terrorist attacks, coups d'etat and other turmoil around the globe.
Under the program, investors with knowledge of the Middle East and other hot spots would be lured - by the prospect of making money - into buying and selling futures contracts on world events. The Pentagon would then be able to study the collective wisdom of the market on such questions as the impact of US involvement in Iraq and the stability of Jordan's monarchy.
The program, called the Policy Analysis Market, was revealed by two of its critics in the US Senate yesterday in the hope of heading off the registration of investors, set to begin on Friday.
Democrat senators Ron Wyden of Oregon and Byron Dorgan of North Dakota said that more than $US500,000 ($A750,000) had been spent on the project, and the Pentagon had requested $US8 million over the next two years.
taxpayer dollars to create terrorism betting parlours is as wasteful as
it is repugnant," Senators Wyden and Dorgan said in a letter to the
Pentagon. "The American people want the Federal Government to use its
resources enhancing our security, not gambling on it."
The initiative is described by Washington's Defence Advanced Research Projects Agency as "initially a small research program" to use market forces to help predict events in the Middle East.
It would be overseen by the agency's Information Awareness Office, which is headed by retired admiral John Poindexter - the one-time national security adviser to former president Ronald Reagan who was convicted, and later acquitted, of lying to Congress over the Iran-contra affair.
Futures contracts, most commonly purchases of commodities such as oil and grains, often spring up on other subjects, such as elections, wherever people think money can be made by predicting the future.
Under the Pentagon's proposed terrorism prediction system, as many as 10,000 investors would buy futures contracts if they believed an event would occur, and try to sell a contract if they believed it would not.
Investors would be asked to gamble on questions such as: "Will terrorists attack Israel with bio-weapons in the next year?" According to the Pentagon, the investors would be motivated by the "prospect of profit and pain of loss" to make accurate predictions. "The rapid reaction of markets to knowledge held by only a few participants may provide an early warning system to avoid surprise," the Pentagon said.
Senators Wyden and Dorgan labelled the project an ill-conceived waste of taxpayers' money. They said it could even be manipulated by profit-driven terrorists "betting" on attacks that they had not yet launched.
"Can you imagine if another country set up a betting parlour so that people could... bet on the assassination of an American political figure?" Senator Dorgan asked. It was, he said, "unbelievably stupid".
- Los Angeles Times