Wed, Jul 30, 2003 - Page 6 News List

Pentagon starts a gambling ring to track terror activity

AP , WASHINGTON

Senator Byron Dorgan, left, and Senator Ron Wyden appear at a news conference on Capitol Hill on Monday to call on the Pentagon to end a program aimed at predicting possible terrorist events.

PHOTO: AP

The Pentagon views it as a potentially innovative way to get clues about terrorists' plans: a public, stock-market-style exchange where traders can profit by correctly predicting terror attacks or assassinations in the Middle East.

But two Democratic senators say the program is useless, offensive and immoral. They are demanding that the program be stopped before investors start signing up Friday.

"The idea of a federal betting parlor on atrocities and terrorism is ridiculous and it's grotesque," Senator Ron Wyden, an Oregon Democrat, said Monday.

The program is called the Policy Analysis Market. The Pentagon office overseeing it, the Defense Advanced Research Projects Agency, or DARPA, said it was part of a research effort "to investigate the broadest possible set of new ways to prevent terrorist attacks."

Traders would buy and sell futures contracts -- just like energy traders do now in betting on the future price of oil. But the contracts in this case would be based on what might happen in the Middle East in terms of economics, civil and military affairs or specific events, such as terrorist attacks.

Holders of a futures contract that came true would collect the proceeds of traders who put money into the market but predicted wrong.

A graphic on the market's Web page Monday 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 Middle East market, the graphic also included the possibility of a North Korea missile attack.

That graphic apparently was removed from the Web site hours after the news conference in which Wyden and fellow Democratic Senator Byron Dorgan of North Dakota criticized the market.

Dorgan described the market as "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.

But in its statement Monday, DARPA said markets could reveal "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."

According to its Web site, the Policy Analysis Market would be a joint program of 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 been criticized by Congress for its Terrorism Information Awareness program, a computerized surveillance program that has raised privacy concerns. Wyden said the Policy Analysis Market is under the supervision of retired Admiral John Poindexter, the head of the Terrorism Information Awareness program and, in the 1980s, national security adviser to former president Ronald Reagan.

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