AT PENTAGON, ALL BETS OFF ; 'EGREGIOUS ERROR OF JUDGMENT,' J. WARNER SAYS OF 
PROPOSAL
The Associated Press

30 July 2003
The Richmond Times-Dispatch
City
A-1

WASHINGTON

The Pentagon yesterday abandoned a plan to establish a futures market that 
would have allowed traders to profit by correctly predicting assassinations 
and terrorist strikes in the Middle East.

Facing outraged Democratic senators, Deputy Defense Secretary Paul Wolfowitz 
said he learned of the program in the newspaper while heading to a Senate 
Foreign Relations hearing on Iraq.

"I share your shock at this kind of program," he said. "We'll find out about 
it, but it is being terminated."

Armed Services Committee Chairman John W. Warner, R-Va., said he received 
assurance from the head of the Pentagon agency overseeing the program that 
it will "stop all engines on this matter today."

Warner spoke by phone with Tony Tether, head of the Pentagon's Defense 
Research Projects Agency, after consulting with Intelligence Committee 
Chairman Pat Roberts, R-Kan., and Appropriations Chairman Ted Stevens, 
R-Alaska. The three agreed "that this should be immediately disestablished," 
Warner said.

Warner said that agency "didn't think through the full ramifications of the 
program."

The Pentagon plan envisioned a potential futures-trading market in which 
speculators would wager with one another on the Internet on the likelihood 
of various economic or political events in the Middle East, including 
terrorist attacks or assassinations.

A Web site promoting the plan is available, and registration of traders was 
to begin Friday.

When the plan was disclosed Monday by Democratic Sens. Ron Wyden of Oregon 
and Byron L. Dorgan of North Dakota, the Pentagon defended it as a way to 
gain intelligence about potential terrorists' plans. Wyden called it "a 
federal betting parlor on atrocities and terrorism." Dorgan described it as 
"unbelievably stupid."

Criticism mounted yesterday. On the Senate floor, Democratic Leader Thomas 
Daschle of South Dakota denounced the program as "an incentive actually to 
commit acts of terrorism."

Republicans joined in the criticism. At a news conference, Warner, Stevens 
and Roberts said they had not been told details of the program and would 
never have supported it. "This defies common sense. It's absurd," Roberts 
said. Warner called it "a rather egregious error of judgment."

The agency 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 Adm. John Poindexter.

Warner said Poindexter and Tether had personally reviewed the program. 
Warner, Roberts and Stevens declined to say whether the two men should be 
fired.