Pentagon scraps terror futures market - Plan drew criticism from Democrats.

30 July 2003
Daily Star (Beirut, Lebanon)

A Pentagon plan to get information on the Middle East by setting up an 
online futures market where investors would bet on the probability of war, 
terrorism and other events is going to be scrapped, Deputy Defense Secretary 
Paul Wolfowitz said Tuesday.

"My understanding is it's going to be terminated," Wolfowitz told members of 
the Senate Foreign Relations Committee, adding that while the Defense 
Department was supposed to be imaginative, "it sounds like maybe they got 
too imaginative."

The Policy Analysis Market, put online at www.policyanalysismarket.org by 
the Pentagon's Defense Advanced Research Projects Agency (DARPA), aimed to 
let anonymous traders log on and wager money on when and whether such events 
as the overthrow of the Jordanian monarchy might take place.

Traders were to start registering for the program Friday, with live trading 
set to start Oct. 1.

The plan drew sharp criticism from congressional Democrats, including Senate 
Minority Leader Tom Daschle of South Dakota, who asked the Bush 
administration Tuesday to renounce the plan and apologize for it.

"We are asking the administration this morning to renounce this plan to 
trade in death," Daschle said on the Senate floor, adding that "this is just 
wrong."

The little-publicized Pentagon plan envisioned a futures trading market in 
which speculators would wager on the internet on the likelihood of a future 
terrorist attack or assassination attempt on a particular leader.

When the plan was disclosed by two Democratic senators on

Monday, the Pentagon defended it as a way to gain intelligence about 
potential terrorists' plans.

Senator Hillary Rodham Clinton, among others Democrats, said she was 
appalled to hear of plans to set up "a futures market in death."

"The idea of a federal betting parlor on atrocities and terrorism is 
ridiculous and it's grotesque," said Senator Ron Wyden, one of two lawmakers 
who disclosed the plan Monday.

The program is called the Policy Analysis Market. DARPA, the Pentagon office 
overseeing it, 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 
President Yasser Arafat would be assassinated or Jordanian King Abdullah II 
would be overthrown. Although the site described the Policy Analysis Market 
as Middle East market, the graphic also included the possibility of a North 
Korean missile attack.

That graphic apparently was removed from the website hours after the news 
conference in which Wyden and fellow Democratic Senator Byron Dorgan 
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 asked.

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."

DARPA has been criticized by Congress for its Terrorism Information 
Awareness program, a computerized surveillance program that has raised 
privacy concerns. - Agencies.