Pentagon drops terror futures market plan

KEN GUGGENHEIM
Associated Press

30 July 2003
The Milwaukee Journal Sentinel
Final
2A

Pentagon drops terror futures market plan

Some lawmakers want answers, an apology from those responsible

By KEN GUGGENHEIM Associated Press

Wednesday, July 30, 2003

Washington -- 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 (R-Tenn.) asked Appropriations Committee Chairman 
Ted Stevens (R-Alaska) and Armed Services Chairman John Warner (R-Va.) to 
make sure it wasn't funded.

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."