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Pentagon Cancels Terrorism Betting Plan

July 29, 2003

WASHINGTON (AP) _ Under fire from all sides, the Pentagon on Tuesday dropped plans for a futures market that would have allowed traders to profit from accurate predictions on terrorism, assassinations and other events in the Middle East.

Republicans said they knew nothing about the program and would never have approved it. They called the head of the Pentagon agency overseeing the project to Capitol Hill to answer questions.

Democrats demanded details of any related Pentagon programs, an apology from the Bush administration and the firing of those responsible for the market.

``I think those who thought it up ought not only close down the program. They ought not be on the public payroll any longer,″ said Sen. Byron Dorgan, D-N.D, at a news conference.

At a hearing where senators criticized the program, Deputy Defense Secretary Paul Wolfowitz said, ``I share your shock at this kind of program.″ But he also defended the Pentagon office that came up with the project, saying ``it is brilliantly imaginative in places where we want them to be imaginative.″

Dorgan and Sen. Ron Wyden, D-Ore., touched off the furor Monday by disclosing details of the Policy Analysis Market, a project that seemed so bizarre that some lawmakers said they thought it was a hoax.

The Pentagon’s Defense Advanced Research Projects Agency, working with two private partners, would have set up an Internet futures trading market on events in the Middle East. Traders could buy and sell futures contracts based on their predictions about what would happen in the region. Examples given on the market’s Web site included the assassination of Palestinian leader Yasser Arafat and a biological weapons attack on Israel.

Investors were to begin registering Friday and trading was to begin Oct. 1.

From the trading patterns, the Pentagon agency, known as DARPA, hoped to gain clues about possible terrorist attacks. In statements Monday and Tuesday, it said markets are often better than experts in making predictions.

But the response from both parties was outrage.

``This program could provide an incentive actually to commit acts of terrorism,″ Democratic Leader Tom Daschle of South Dakota said on the Senate floor. He described it as a ``plan to trade in death.″

Majority Leader Bill Frist of Tennessee asked Appropriations Committee Chairman Ted Stevens, R-Alaska, and Armed Services Chairman John Warner, R-Va., to make sure the market wasn’t funded.

``I cannot conceive of any reason why the United States government should be involved in a project of this nature,″ Frist said.

By late morning, Warner and Wolfowitz, at separate hearings, announced the program would be ended.

As he praised DARPA at a Senate Foreign Relations hearing, Wolfowitz said with a smile, ``It sounds like maybe they got too imaginative.″

Sen. Barbara Boxer, D-Calif., told Wolfowitz, ``I don’t think we can laugh off that program.″

``There is something very sick about it,″ she said. ``And if it’s going to end, I think you ought to end the careers of whoever it was thought that up. Because terrorists knowing they were planning an attack could have bet on the attack and collected a lot of money. It’s a sick idea.″

Warner said he had spoken with the head of DARPA, Tony Tether, who agreed the program should end.

Warner said in an interview that DARPA ``didn’t think through the full ramifications of the program.″

Senators said they had only vague information about the DARPA project that included the market. That project, FutureMAP, or ``Futures Markets Applied to Predictions,″ will end along with the market Web site, the Pentagon said.

The Pentagon had requested $3 million for FutureMAP next year. The senators said the money attracted little attention in the overall the $3 billion DARPA budget proposal.

About $750,000 had been approved for FutureMAP in past budgets.

``It’s totally unauthorized as far as we’re concerned,″ Stevens said. ``No funds should have been used for it at all. It’s really a serious mistake on the part of DARPA.″

Tether was called to Capitol Hill to meet with Warner and Sen. Pat Roberts, chairman of the Intelligence Committee and Armed Services’ emerging threats subcommittee.

Warner’s spokesman, John Ullyot, described the meeting as businesslike and professional. He said the senators will submit written questions to Tether and will await responses before deciding if hearings or other actions are needed.

Tether was asked as he left whether retired Adm. John Poindexter, who runs the DARPA division that included the market program, would keep his job.

``I don’t see why not,″ he said.

Poindexter, who runs DARPA’s Information Awareness Office, is used to political storms. A former national security adviser to President Reagan, Poindexter was a key figure in the 1980s Iran-Contra scandal. In addition to FutureMAP, his office oversees the Terrorism Information Awareness project, a computerized surveillance program that has raised privacy concerns.

Asked if Poindexter remained on the DARPA payroll, Pentagon spokesman Lawrence Di Rita said, ``At the moment, Admiral Poindexter continues to serve in DARPA.″


On the Net:

DARPA’s FutureMAP Web site: http://www.darpa.mil/iao/FutureMap.htm

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