- The Washington Times - Tuesday, July 29, 2003

The Pentagon yesterday pulled the plug on an online gambling parlor designed to predict Middle East terrorist attacks for profit after criticism from Capitol Hill lawmakers, who called the plan “grotesque.”

Deputy Defense Secretary Paul Wolfowitz said he first learned of the market trading plan sponsored by the Terrorism Information Awareness program in the morning newspaper on his way to a Senate Foreign Relations Committee hearing.

Mr. Wolfowitz told the panel lawmakers that the program will be terminated.

“We’ll find out exactly how this happened. Recognizing, by the way, that the agency that does it is brilliantly imaginative in places where we want them to be imaginative. It sounds like maybe they got too imaginative in this area,” Mr. Wolfowitz said.

The Policy Analysis Market was to have started signing up as many as 10,000 traders Friday to deposit funds for the transactions. TIA said the program would provide the Defense Department “with market-based techniques for avoiding surprise and predicting future events.”

Investors who could successfully predict assassinations, government overthrows, or missile attacks in North Korea and the Middle East would have profited financially at the start of trading Oct. 1.

“The director has determined that this is a program that under further scrutiny probably doesn’t deserve continued support,” Defense Department spokesman Lawrence Di Rita told reporters at a daily briefing.

Mr. Wolfowitz said he did not know who had established the program, which has cost more than $600,000, or whether Adm. John Poindexter, the TIA director, was responsible.

“I’d like to know, too, and I intend to find out,” Mr. Wolfowitz said. “I share your shock at this kind of program. We’ll find out about it, but it is being terminated.”

The Defense Advanced Research Projects Agency (DARPA), which oversees TIA, later issued a statement saying the agency has “withdrawn” from the project, and that a related effort will be “terminated for convenience, effective immediately.”

DARPA said the program “was meant to explore the power of futures markets to predict and thereby prevent terrorist attacks. Future markets have proven themselves to be good at predicting such things as elections results; they are often better than expert opinions.”

DARPA Director Tony Tether said the program had been in development and had faced “a number of daunting technical and market challenges,” including whether terrorists could manipulate the markets.

“Reconsidering those challenges in light of the recent concerns surrounding the program, it became clear that it simply did not make sense to continue our participation in this effort,” Mr. Tether said.

“Our job at DARPA is to explore new ideas and innovative research to enhance national security. The resources that would have been applied to this project will be applied to other more fruitful pursuits,” Mr. Tether said.

The program first came under fire Monday from Democratic Sens. Ron Wyden of Oregon and Byron L. Dorgan of North Dakota, who threatened to kill $8 million in additional funding.

“Betting on terrorism is morally wrong,” said Mr. Wyden, who described it as “grotesque” and “bizarre.”

Yesterday, Senate Majority Leader Bill Frist, Tennessee Republican, sent a letter to Sens. Ted Stevens, Alaska Republican and chairman of the Appropriations Committee, and John W. Warner, Virginia Republican and chairman of the Armed Services Committee, asking that the funding be axed.

“I cannot conceive of any reason why the United States Government should be involved in a project of this nature, and I ask that you ensure that final action on the Defense Department spending bills under the jurisdiction of your respective Committees include no funding or authority for this initiative,” Mr. Frist said.

Mr. Warner spoke with Mr. Tether by phone and later said DARPA “didn’t think through the full ramifications of the program.”

“This defies common sense. It’s absurd,” said Sen. Pat Roberts, Kansas Republican and chairman of the Senate Select Committee on Intelligence.

Sen. Hillary Rodham Clinton, New York Democrat, called it “a futures market in death.”

“This is just wrong,” added Senate Minority Leader Tom Daschle, South Dakota Democrat, who called the program “an incentive actually to commit acts of terrorism.”

The proposed “market” was to replace the approach of discussion among experts. It was to set up two kinds of future contracts, one that would pay $1 if an attack occurred; the other would pay $1 if there was no attack. The winnings would have been paid out of the pool of bets.

Stephen Dinan contributed to this article, which is based in part on wire service reports.

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