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India Inc. becomes another outsourcing gold rush: unwary firms get red ink


India Inc. is Twice as Fast as Japan Inc. should be a must-read on two levels, growing US uncompetitiveness coupled with a declining educational system, and loss of intellectual property (IP) assets at both the data and algorithmic level. Unfortunately only the former -- uncompetitiveness -- is central to the article. The latter -- threats to IP -- again go unmentioned.

Keller's central message that "India’s rise in IT and other areas means U.S.-based companies must radically change their view of competition and what becomes strategic domestic employment" is true enough as is his admonition that the mental timeline, the safety belt if you will, of many US managers familiar with the Japan Inc. progression in electronics and automotive must be halved when considering India's progression in IT. Keller properly notes that Indian labor costs are significantly lower than Japan when it began its climb, but that Indian quality often rivals or exceeds current US quality. His detailing of Indian skills sets a clear, high bar for US industry that demands active response.

The section that commands my attention is the relocation of "core product development" to India:

The fastest change is occurring with the major software vendors that have moved much of their core product development to India. For example, nearly all of SAP’s BW product development and much of NetWeaver resides in India. Oracle and PeopleSoft have accelerated deployment of Research and Development (R&D) and support resources in India; Oracle has more than 6,400 people now employed in India and plans to have nearly 10,000 by the end of 2005.

Some companies, such as Kana, have taken an extreme view and have sent all R&D to India. Venture capitalists require that any startup have a plan and capability to deploy R&D in India. While technology-oriented companies have embraced offshoring, most end-user organizations continue to be cautious about how much and how fast they can offshore IT operations. In the next few years, however, their internal IT cost models will prove too high and force them to change.

I refer readers to Intellectual property theft: the unspoken unknown of offshoring and Hemorrhaging intellectual property to Asia. Relatively speaking, India has not exhibited wide or state sponsored IP collection, being content at present to compete in terms of lower cost, thus:

the larger risk is the placing of critical IP resources in an offshore environment where they are vastly more susceptible to exploitation by one or more collectors -- often many collectors from the same entity each intent on gaining specific bits of corporate information. The risk is effectively present in varying degrees for US offshoring in India, China, Korea, Russia, Belarus, or European nearshoring to the Czech Republic, Poland, Hungary, the Baltic states, Morocco and Tunisia.

At the VC level, investors are driving their stable of firms to create product and to produce revenue without sufficient consideration to risk. Risk assessment is very low on their horizon. Private conversations reveal that VCs preach the mantra to their portfolio companies, for example: "Outsource hardware development and manufacturing to China or become uncompetitive." Most VC conferences conducted today direct firms to go low cost without an understanding of the risks to the underlying assets. Some VCs have already taken the next step of forming development groups in Asia precisely to serve their entire stable of firms.

Keller concludes in part:

The availability of inexpensive and reliable network and computing technology implies that any job or task that does not require the physical presence of a person can be sent offshore. India followed by others, including China, Eastern Europe, Russia, the Philippines, and Vietnam, are creating a sophisticated pool of highly specialized and educated workers who have shown the ability and willingness to deliver high-quality, low-cost work.

The reader will note the significant overlap between the two country lists. Lowest cost is rarely lowest risk. It is our experience that firms effectively loose control of IP when it is outsourced as little as two levels. We have observed IP theft by nations both in-country and in adjacent countries where they have either penetrated or bought stakes in local firms. Paradoxically, countries without strong police powers also permit the entry of secondary collectors that use the more permissive environment to collect what they could not feasibly or financially obtain in a stronger security environment.

Firms are overdue in considering IP diversion by multiple collectors in their cost and risk planning for offshoring and nearshoring. India "inc" should not become red ink.

India Inc. is Twice as Fast as Japan Inc.
Erik Keller
AMR Research
October 20, 2004

Gordon Housworth

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As the truth changes so must the deception if the lie is to remain believable


Part 3

An especially interesting statistic in deception is that the number of deceptions rise at the moment of attack approaches. If one becomes sensitive to a pattern of deception, it becomes much easier to field a countering move. Some political readers might say "but we know the date of the election," presuming it to be the 'attack.' I submit that the answer is far more subtle than that. Knowing that an election is forthcoming (known event in time) allows one to be especially attentive to the growing number of deceptions and ruses that will arise. Further, a presidential election is merely the culmination of a campaign comprised of many dispersed 'skirmishes' each of which has its own unique constituency and psychological context and is thus sensitive to varying deception. A stupendously effective (leave aside whether you think it accurate or fair) disinformation effort was the Swift Boat affair that put the Democratic candidate off-message and on the defensive. I believe that I heard Rove remark, if memory serves, that, 'My job is not to be fair. My job is to re-elect the President.' An appropriate response, I might add. Fairness has little to do with war. Successfully countering the deception at hand is.

Knowing that the rules of motivating an electorate have fundamentally changed and that Denial and deception (D&D) has entered the mainstream is the first step, The second it to understand what D&D seeks to do:

  • Disrupt one's ability to "observe, orient, and decide" (Boyd's OODA Loop)
  • induce inaccurate impressions about capabilities or intentions, causing the target to apply intel assets inappropriately, and fail to employ all assets to best advantage

Countering deception is hard because "those being deceived do not systematically consider alternative explanations for the evidence they observe, and incorrectly weigh the evidence they do have." "People often dismiss important evidence, prematurely prune alternative hypotheses, and jump to conclusions. These make people and organizations easy to deceive." Since deception is relatively rare, it is not surprising that people are poor at countering deception:

  • Poor anomaly detection (missing contextual cues, or prematurely dismissing as irrelevant or inconsistent with other intel)
  • Misattribution (attributing deception event to collection gaps or processing errors)
  • Failure to link deception tactics to deception hypotheses (noticing anomalies fails to recognize them as indicators of deception)
  • Inadequate support for deception hypotheses (failing to link an assessment of an adversary's deception tactics and goals to the adversary's strategic goals; i.e., failing to test denial or deception course of actions (COAs) against the available evidence)

Start with Heuer's Psychology of Intelligence Analysis, one of the great masterpieces of understanding the analytic thought processes of intelligence, of overcoming cognitive biases, and of stepping away from preconceived mind-sets and mental models. Heuer presents a protocol called Analysis of Competing Hypotheses (ACH) that I have used for both signal and sprignal (deception) analysis:

  • Identify the possible hypotheses to be considered
  • List the significant observed evidence and assumptions for and against each hypothesis
  • Prepare a matrix with hypotheses across the top and evidence down the side
  • Refine the matrix
  • Draw tentative conclusions about the relative likelihood of each hypothesis
  • Analyze sensitivity of the conclusion to a few critical items of evidence
  • Report conclusions
  • Identify milestones for future observation that may indicate events are taking a different course than expected

In what I see as a parallel of Whaley applied to Wohlstetter, Stech and Elsasser have sought to extend Heuer's ACH so as to account for cognitive factors that make people poor at detecting deception.

Their concern was that ACH can "lead one to be more susceptible to deception." In particular, Heuer's 'Draw tentative conclusions' step recommends weighing hypotheses in light of evidence, a process that already promotes reasoning errors rising from "everyday irrationality." The problem with 'weighing hypotheses in light of evidence' is that in conventional analysis, it neglects the individual base rates of both evidence and hypothesis, and in counter-deception conditions, it fails to flag an evidentiary false positive rate. In order to adapt ACH for counter-deception, Stech et al has modified ACH so that "hypothesis generation includes appropriate denial and deception COAs, and the ACH is used to elicit or estimate both" 'weighing hypotheses in light of evidence' and weighing evidence as signal, noise, or sprignal.

Suffice it to say that any major political party will have to master these techniques in countering deception, but learning is not easy. I am reminded that David Kahn's 1992 analysis of Pearl Harbor's intel failures (where we did not merge diplomatic and military data and depended on Magic decryptions to the exclusion of warnings contained in non-Sigint intel) "has taught the United States to gather more information and evaluate it better." Subsequent responses to new adversaries have not borne that out.

Psychology of Intelligence Analysis
Richards J. Heuer, Jr.
CSI, CIA 1999

Midway Revisited: Detecting Deception by Analysis of Competing Hypothesis
Frank Stech and Christopher Elsasser
Mitre, June 2004

Gordon Housworth

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Deception at its best: the opponent is quite certain, very decisive, and wrong


Part 2

The ultimate goal of stratagem is to make the enemy quite certain, very decisive, and wrong. -- Barton Waley

Rove's most effective efforts strike me as similar to Allied deception efforts in WW II that earned them such success: "controlled the key channels of information, had superior intelligence and received feedback on their deception operations, centralized controlled over their deception planning, effectively practiced proven deception tactics, ensured deception operations were subordinate to strategic objectives, maintained stringent secrecy, and provided enough time to execute deception plans shrewdly." Democrats have much to learn.

Careful analysis of patterns within sprignals had the potential to accelerate timely warning of surprise attack. Whaley's later analysis extended to 68 cases of surprise attack in 20th century warfare, in Stratagem: Deception and Surprise in War. Harris noted:

"Whaley found a high positive correlation between the intensity of deception (counting types of channels utilized for intensity) and the likelihood of surprise attack, and a positive correlation between the intensity of deception and the intensity of surprise, using, for example, casualty ratios in war as a proxy for intensity of surprise."

Returning to Wack:

After concluding the nonaggression pact with Hitler in 1939, Stalin was so convinced the Germans would not attack as early as 1941 -- and certainly not without an ultimatum -- that he ignored 84 warnings to the contrary. According to Barton Whaley, the warnings about Operation Barbarossa included communications from Richard Sorge, a Soviet spy in the German embassy in Tokyo, and Winston Churchill; the withdrawal of German merchant shipping from Soviet ports; and evacuation of German dependents from Moscow.

Deception, be it military, diplomatic, or political, has four components:

  • Security
  • Plausibility
  • Adaptability (however elaborate, deception must adapt to the changing situation)
  • Integration (deception effort integrated at all levels and with all means)

Using these components, Every deception effort is comprised of only two basic parts: hiding the real and revealing the false. Hiding the real is called dissimulation. It is the covert part, that which is concealed from the enemy. Revealing the false is called simulation. It is the overt part, that which is falsely revealed to the enemy as truth. Dissimulation and simulation are always present together in any act of deception.

The US Army has extracted ten maxims from game theory, history, and deception writings that make a good basis for planning a deception:

  1. Reinforce his beliefs (Magruder's Principle)-It is generally easier to induce a target to maintain an existing belief than to entice him to change his beliefs.
  2. Target his mind--There are limitations to human information processing that are deceptively exploitable.
  3. Use multiple forms of surprise-- Surprise can be achieved in the following categories: size, activity, location, unit, time, equipment-(SALUTE) intent, and style.
  4. Feed all the enemy's sources (Jones' Dilemma)-- Deception becomes more difficult as the number of sources available to confirm the real increases.
  5. Create Noise only for a purpose--Too much erroneous information can obscure the deception effort.
  6. Use deception selectively--It may be wise to withhold the employment of deception capabilities until the stakes are high.
  7. Deception is continuous--Deception activities should be sequenced to portray the deception for as long as possible.
  8. Feedback is a must--An intelligence collection scheme should be employed to determined if the deception is being adopted, rejected, or countered.
  9. Focus on the enemy's action (The Monkey's Paw)- Deception efforts may produce unwanted actions from the enemy and friendly units.
  10. Don't make it easy for him--If the target's intelligence collection system has to work for the indicators, the greater the chance he'll believe them.

I have yet to make a systematic analysis of such politically manipulative actions in the current presidential election campaign, but they all seem to be present.

Part 4

Stratagem: Deception and surprise in war
Barton Whaley
MIT Center for International Studies

Barton Whaley
MIT Press, 1974

Gordon Housworth

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The value of counter-deception and early sprignal detection in political elections


Part 1

Deception planning and deception countermeasures, sprignals included, deserves a deeper dive to highlight its omission from analyzing commercial business endeavors and parsing political spin control. It is exceedingly sad to see it relegated to diplomatic and military spheres when it can shed advance notice that saves investors' money and clarifies voters' opinions that would other wise fall prey to spoofing and disinformation.

After Shouters and charlatans was posted to a major political blog, Daily KOS, I received questions about sprignals and news analysis, and positive comments on the critical analysis of this log, the latter of which were posted back to KOS. I got the impression from their post-backs that these readers were expecting to find bias here but did not, might have assumed the worst but found the logic and sourcing sound, with some noting that they had bookmarked us. I take that as success and proceed.

In 2002, I highlighted the use of sprignals and deception in Enron & Arthur Anderson: to comply is not enough; those who generated sprignals, those who were taken in by them, and those that were powerless to halt them:

Enron Corp. mimicked this model of strategic surprise in which deliberate "signals" designed to lull or defeat warning systems were issued in ever increasing volume. These signals took a variety of forms such as "designer investment" vehicles, obscured financials, and corporate pronouncements. Enron’s auditor, Arthur Andersen, alternatively abetted the creation of these signals or validated them as genuine.

It was startling that despite their "professed independence and variations in technique," prominent sell-side analysts overwhelmingly reached the same, wrong, conclusions about Enron in 2001 up to the eve of its bankruptcy. The skeptics were independent and boutique sell-side analysts, short-sellers, and consumer/NPO groups intent on looking through Enron’s seeming achievements for fundamental financial red flags. The latter were drowned out in what is the only sprignal business application that I can find.

I see even less structural application of counter-deception to the increasingly politicized, media-message driven political sphere. I submit that counter-deception will be become mandatory for major political parties if their adherents are not to be unduly influenced or siphoned off, for whatever one thinks of Karl Rove, aspiring Democrat and Republican political managers are tracking and preparing to implement his "remarkable strategic skills, [his] understanding of the media's unstated self-limitations and a willingness to fight" with greater ruthlessness than most.

Required history:

Roberta Wohlstetter pioneered intelligence warning systems by applying Claude Shannon's telecommunication concept of signals and noise and his design of information systems to send and receive signals amid noise. Wohlstetter's Pearl Harbor concluded that the problem was "too much noise" rather than a lack of data, i.e., it was analysis that failed: "We failed to anticipate Pearl Harbor not for want of the relevant materials, but because of a plethora of irrelevant ones."

Contributing causes were invalid assumptions, faulty appraisal and dissemination of intelligence, and inadequate security measures. Behind these was a lack of war-mindedness at this Pacific base halfway around the world from areas where momentous events were happening. Adm. Husband E. Kimmel, the Pacific Fleet commander, admits to it: "We did not know that in the Atlantic a state of undeclared war existed (Admiral Kimmel's Story, p. 2, New York 1955). The War and Navy departments also shared in responsibility for the disaster, not only by withholding intelligence but by assigning low priorities to critical equipment for ships and units in the Hawaiian area.

Pierre Wack drives home this need of awareness of one's greater surroundings in his discourse on scenarios, what he calls the "gentle art of reperceiving."

In times of rapid change, [companies] effectiveness and speed in identifying and transforming information of strategic significance into strategic initiatives differ just as much [as their skill in turning research into product]. Today, however, such a capacity is critical. Unless companies are careful, novel information outside the span of managerial expectations may not penetrate the core of decision makers' minds, where possible futures are rehearsed and judgment exercised.

As Roberta Wohlstetter points out, "To discriminate significant sounds against this background of noise, one has to be listening for something or for one of several things. One needs not only an ear but a variety of hypotheses that guide observation". Indeed, the Japanese commander of the Pearl Harbor attack, Mitsuo Fuchida, surprised at having achieved surprise, asked, "Had these Americans never heard of Port Arthur?" (the event preceding the Russo-Japanese War of 1904 -- and famous in Japan -- when the Japanese navy destroyed the Russian Pacific fleet at anchor in Port Arthur in a surprise attack).

Barton Whaley used the model in his analysis of Soviet attempts to predict an impending German attack, Operation BARBAROSSA. Whaley's first analysis cited 12 cases of strategic surprise to which William Harris believed that "the Russian warning intelligence challenge in 1941 was to differentiate genuine "signals" of impending invasion from "spurious signals" from deception planners (defensive military preparations and deployments, non-hostile intent, etc.) within the context of other information "noise."" As a "minimum of 8 or 9 of these 12 warning challenges involves deliberate "signals" designed to lull or defeat warning systems," Harris suggested that Whaley "utilize a tripartite model: signals, spurious signals (sprignals), and noise."*

Part 3

*Private email, 17 March, 2001, from William R. Harris noting his derivation of sprignal building upon the work of Roberta Wohlstetter and Barton Whaley.

Pearl Harbor: Warning and Decision
Roberta Wohlstetter
Stanford Univ Press, 1962

Gordon Housworth

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Shouters and charlatans: viewing mainstream news solely to understand our clients' state of misinformation


"If a nation expects to be ignorant and free, in a state of civilization, it expects what never was and never will be." -- Thomas Jefferson

"A popular Government without popular information or the means of acquiring it, is but a Prologue to a Farce or a Tragedy or perhaps both. Knowledge will forever govern ignorance, and a people who mean to be their own Governors, must arm themselves with the power knowledge gives." -- James Madison

My patient high school civics teachers will be pleased to know that much of their good work stuck. Yes, they also told me of laments of Alexander Hamilton ("the newspapers have teemed with the most inflammatory railings") and Thomas Jefferson ("The advertisement is the most truthful part of a newspaper"), but that only served to sharpen an eye for mischief among the pages.

Returning readers are aware that my job is critical analysis with pointed conclusions that I like to describe as 'Stay or run for the airport.' They will also know that I am believer in the Berlin Wisdom Model, the systems analysis of Russ Ackoff, the sprignal (spurious signal) concept of William Harris*, and the tools and mindset of what is often called Counter-Deception Decision Support.

Watching what now passes for news on cable TV, broadcast TV, internet, and press commands that the reader have an especially acute sensitivity to the presence of sprignals (intentional deceptions) among signals (legitimate data, secret or public) and noise (other random unrelated material). So much of this material -- calling it 'news' offers it too much grace -- is so omissive, or comissive in its attempt to distort and shift opinion that, without knowing it, the reader is under siege. In short, it now takes work to find accurate information.

The descent of mainstream news (cable and broadcast) has been so great that after years of largely ignoring it, I have had to return to it in order to understand our clients' state of misinformation, i.e., the degree of misinformation dictates the amount of added detail that we will have to include in our analyses in order to refute the bad before we can present the good.

This mangling of the news is handmaiden to the manipulation of public opinion in Imperial Rome became Italy; de Tocqueville's America becomes what? and especially "Congregation for Propagating the Faith" to agitprop to oppo research; four centuries of manipulating public opinion, foreign and domestic.

One of the few things that give me hope in this environment is Jon Stewart and "The Daily Show" -- a program that was first brought to my attention by my son and niece who both noted that it was all the rage among 20-somethings and the CPO (cell phone only) generation. "Half of 18- to 29-year-olds say they regularly or sometimes learn things from late-night comedy shows" while "Only 17 percent of the program's audience is over 50."

Stewart earned my undying respect when he passed from comedy and parody to scathing commentary during his Trojan Horse interview on CNN Crossfire (transcript here). I share with my younger generation Stewart's comment that, "We feel a frustration with the way politics are handled and the way politics are handled within the media." I am thrilled to see that "Daily Show fans are more knowledgeable about current events than those of other comedy shows, rivaling newspaper readers and network news viewers."

In an environment where I now find even the interviews of Tim Russert to fail to press the point, where Fox is beyond the pale, where CNN has lost its way, where broadcast anchors admit to self-censorship in an effort to avoid commercial attack, where the only TV news that I seek out is PBS (Lehrer, Moyers, Frontline et al), I will continue to rely on primary source materials -- the stuff from which the high street press is crafted, and a broad spectrum of offshore sources to form my opinions.

And the Daily Show.

Part 2

*Private email, 17 March, 2001, from William R. Harris noting his derivation of sprignal building upon the work of Roberta Wohlstetter and Barton Whaley.

The Campaign of a Comedian
By Howard Kurtz
Washington Post
October 23, 2004

Jon Stewart's America
Aired October 15, 2004 - 16:30 ET

Anchors Aweigh: The Refs Are Worked
by Eric Alterman
The Nation
November 1, 2004 issue

Gordon Housworth

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US beginning to mimic Israel: win every battle, lose every war


tends to focus too much attention on fighting and battles at the expense of looking at bigger picture -- the causes, consequences and political goals of conflict.

inability to understand the complexity of the forces at work [in terrorism] also points to overarching policy failures. We have been too slow to realize the broad religious, cultural, political, economic and demographic dimensions at play in the Middle East.

failed to see the need for serious stability operations and nation building; they did not see the risk of insurgency; and they assumed that we were so right that our allies and the world would soon be forced to follow our lead.

Israel or the US? The subject is the US, but I submit that it applies similarly to both states. While it has long been my habit to say that Israel wins every battle but loses every war

My current view of root cause for our not being able to win the peace has four components:

  • Lack of administration and congressional political will (but those politicians tack to the whims of we the citizens) to stick it for a sufficiently long term
  • Short-termism of American thinking, i.e., the unwillingness to endure the dull process of nation building, e.g., constructing a national polity and rebuilding infrastructure far from activities that win votes or build industry at home
  • Lack of planning and analysis to predict the manpower levels and skills needed to enforce a peace long enough to graft on political stability
  • Change in conflict style that has shifted from nation state to diffuse asymmetrical and/or terrorist entities on a far larger scale than in the past

I believe that claims of US success in nation building as evidenced in Japan and Germany had more to do with the cultures and industrial bases at hand than innate US skill. It should also be noted that we fielded WW II era manpower levels that were able to enforce the peace (which was not as simple as most assume as there were some German guerrillas). As soon as we departed from industrializing, culturally cohesive states not engaged in ethic strife or civil war, we failed, to wit, the Philippines, Angola, Lebanon, Liberia and Somalia.

For a summary of the state on the ground, I refer readers to Redirecting our intel processes in Iraq. I fear that it is less that the "enemy is becoming more sophisticated," than it is that we are less able to predict and interdict a superb asymmetrical opponent. I support the opinion of IISS that the Iraqi invasion has "enhanced jihadist recruitment and intensified al-Qaeda's motivation" while US forces offer terrorists "perhaps its most attractive 'iconic' target outside US territory."

"Al-Qaeda middlemen can still provide planning and logistical advice, materiel and financing to smaller affiliated groups. The leadership still appears able to roughly influence the wider network's strategic direction." IISS goes on to state that up to 1,000 new jihadis may have recently infiltrated Iraq -- and with some 18,000 having been trained, more could be in the offing.

I do not support the opinion of a "U.S. defense official" that the 'infiltrating insurgents and guerrilla groups' are primarily awash in Saudi money flowing through Syria. On the contrary, insurgents and jihadists receive aid from a "diffuse network of supporters, funneled through charities, tribal relations, and businesses" as well as al Qaeda accounts. I very much agree with Vince Cannistraro, former CIA counterterrorism chief, that "The overall resistance in Iraq is popular and is getting more popular in the Arab world."

I also challenge the funds needed to support hostilities as these folks are frightfully frugal while the cost of weapons and ammunition is nil as we failed to identify, sequester or destroy literally hundreds of dumps that have since been looted and their contents relocated. The vast number of jihadists (non-Iraqi) are volunteers, easy to sustain. The overhead of loader to shooter is very low and the operational cost to sustain the lot is a fraction of US forces. There are two Baathist camps that also engage in criminal activities to fund their terrorist ends.

We have created an environment in which Abu Musab Zarqawi could rise to the mythic stature of bin Laden by virtue of his ability to attack US assets, achieve victories, and then manipulate public opinion in both the West and Arab press.

Israel drove the PLO from Lebanon and was rewarded with an awakened Hamas and Hezbollah. The US has allowed "Jihad has become central in Iraq, and Zarqawi is now central to that."

Analysis: Military expert wants better U.S. policy
UPI, Oct. 22, 2004

Iraq Called 'Springboard' for Insurgency Figure
By Walter Pincus
Washington Post
October 21, 2004

Insurgents Infiltrating Iraq Have Cash
The Associated Press
October 21, 2004

Defence think-tank says Iraq is increasing global nuclear threat
Mirrored here
Financial Times
October 20, 2004

Gordon Housworth

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To bribe or not to bribe: a refreshingly, if infrequent, realistic operational question


"How can you work in diamonds in Africa, Russia or some other weak-governance places in the world without paying an occasional (or frequent) bribe?"

The latest Diamond Best Practice Principles from De Beers' Diamond Trading Company (DTC) have repeatedly brought this question to the fore among industries in and beyond the diamond market. And not without reason. When OECD member states, accounting for "more than 90 percent of foreign direct investment worldwide," signed a convention "outlawing bribery by multinational companies of officials abroad, it was regarded as a milestone in the global fight against corruption." Given that France, among the most arch of violators, was one of the signatories, my response was of course laughter.

France's oil firm, Elf Aquitaine, was nothing less than a secret arm of French policy, using cash to cement its acquisition of oil and gas assets and advance French foreign policy in Central Africa, the Gulf of Guinea, Central Asia, and China. The French security services supplemented what money could not achieve. No prosecutions occurred from the 1997 signing (in any country), at least not until Elf's slush funds began repatriating into the French political establishment.

Only the US Foreign Corrupt Practices Act has put perps behind bars and US business at a disadvantage. What was said of the African diamond and mineral industries applies to all industries and in areas beyond "troubled regions":

Bribing was considered part of normal business conduct. Until recently the bribery of foreign public officials was accepted as a normal cost of doing business by many developed western countries. Companies claimed that they must pay bribes in order to be favorably considered for the awarding of contracts. By allowing the tax deductibility of such bribes as an expense in earning income, several governments were perceived as condoning this practice and, actually, they did. Many still do today. Often governments themselves are engaged in bribing other governments or private sector players.

Mindful that the road from mine to mistress can be damaged by "reputational issues," the diamond industry has increasingly displayed intolerance by issuing zero-tolerance rules even as company managers "recognize that the very strict rules may inadvertently and unwittingly create a problem for lower or mid-level level field (out-in-Africa) employees: they are expected to do their job and senior management prefers not to know how things are done. These employees are always at the ‘mercy’ of top management – and are in a no-win position."

No less accomplished than the French, Hezbollah and al Qaeda have maintained an active presence in West Africa since at least 1998. Both active in the diamond trade (Hezbollah in Sierra Leone, Liberia and the Democratic Republic of Congo; and al Qaeda in Liberia and Sierra Leone). Al Qaeda paid a premium over the going rate for uncut stones, not to profit but to "move funds out of traceable financial structures into commodities" prior to 11 September. "The available evidence points to al Qaeda purchasing some $30 million to $50 million worth of RUF [Revolutionary United Front] diamonds during the eight months prior to 9/11."

If you are a diamond extractor, especially one operating in "problematic countries," who are you going to treat in order to maximize income? If you are among the nomenklatura of the kleptocracies that pass for government in too many states, with whom will you prefer to show preference? To these parties, it is immaterial that:

Bribery erodes public confidence in political institutions and leads to contempt for the rule of law... distorts the allocation of resources, inflates spending on public procurement and undermines competition in the market place [has] a devastating effect on investment, growth and development [and] impacts the poor by denying them access to vital basic services.

World Bank officials said that "attempts to improve the transparency of oil production had struggled to gain traction, increasing the probability that corruption would siphon off the benefits of extractive industries in poor countries." Little wonder that actions such as the World Bank's establishing transparent accounts in Chad and Cameroon (for the Chad-Cameroon oil pipeline) into which "revenues would be paid and used for the whole population" are marked by their infrequency.

Bribery And Corruption Still Seen As Rampant In Developing Nations
World Bank DevNews
Oct 21, 2004

To Bribe Or Not To Bribe – Is That The Question?
Chaim Even-Zohar
August 22, 2004
Tacy Ltd. Consultants

"Fighting Terrorism In Africa"
Statement By Douglas Farah
House Committee on International Relations, Subcommittee on Africa
April 1, 2004

Big oil's dirty secrets
May 8th 2003,NEW YORK
The Economist

Gordon Housworth

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Manufacturing efficiency gives rise to a new arms race: convergence of legitimate pharma-chemical, illicit drug, and CW/BW agent


Coining the term "glide slope to the desktop" after reflecting on the progression of copying from carbon paper to mimeograph to centralized toner copiers using proprietary consumables to laser printers to color inkjet and now color laser desktop printers, it is now one of our truisms that every technology has its glide slope (where the angle of descent indicates the cost threshold of acquisition over time) where its capacity will ultimately get to anyone's desktop, anywhere and for any purpose.

Two of the glide slops that we track in an effort to anticipate potential threats are chemical and biological agent production. We have long taken for granted that the market-entry restraints on chemical (including organophosphate or nerve agent) and bio-agent production, as well as their detection thresholds, have plummeted to the point that batch sizes for "low-casualty" attacks (few thousand casualties) relatively easy to produce in that:

  • There's no prerequisite for nation-state sponsorship
  • A straightforward "mid-tech" approach using a small, educable group of committed individuals is sufficient
  • Competent dual-use industrial base provides all equipment either used, surplus, stolen, and acquired from bankruptcies or closures (no need to buy new)
  • Organophosphates are reasonably easy to produce from the pesticide and flame retardant manufacturing base
  • Certain binary nerve agents are easier to produce as their binaries are individually less toxic
  • Terrorists will dispense with the usual barriers to entry of military weaponization and environmental disposal
  • Unique alloy components can be dispensed with in favor of common stainless steel if the lifespan of the production line is short

The upshot is that a "small-scale" facility can target an enclosed space equal to an office building or subway station. We now see developments in manufacturing technology and synthesis science that will drive production convergence of all sectors while its steepens (shortens) the glide slope to the desktop:

  • Legitimate chemical, agrochemical, and pharmacological
  • State-sponsored and non-state-sponsored CW/BW chem-bio agent
  • Illicit "recreational pharmaceutical" drugs

What will be tremendous boon to the legitimate sector (easy transfer from prototype into production, high throughput, effortless scale-up, and greatly improved safety) will make very hard work for proliferation inspectors.

In the shorter term:

  1. Continuously operating, computer controlled microreactors producing significant quantities of product, toxic and otherwise, in very small "footprints"
  2. New catalytic processes and automated process control permitting just-in-time production with fewer contaminating emissions -- an economic and societal boon to the commercial manufacturer but a shield to the illicit producer as it reduces detectable byproducts
  3. Automated computer controls making production processes safer and more efficient, requiring fewer personnel with reduced skill and experience
  4. Increasingly versatile, multipurpose -- effectively dual-use -- production facilities making fine chemicals badly complicate the determination of intent, especially if a small line is nested in a larger facility
  5. Chemical production facilities and skills are dispersing out of high cost manufacturing areas as pharmaceutical intermediates spread to low cost countries and production of commodity chemicals is shifted close to sources of raw materials

In the longer term:

  1. Automated synthesis methods combined with high-throughput screening protocols may likely yield new toxic agents not specifically proscribed, or even known if kept secret, by the Chemical Weapons Convention (CWC)

Impact examples:

  • Microreactors have already safely produced hydrogen cyanide (HCN), methyl isocyanate (MIC) -- which killed so many at Bhopal, and phosgene -- a vesicant blister agent. 10-fold or 100-fold parallelized arrays can achieve multi-kg or ton range output
  • New catalysts allow production of toxic chemicals "from intermediates that are not monitored under current CWC inspection regimes." Following Bhopal, DuPont created a just-in-time production process for MIC without using traditional precursors. New catalytics for the production of phosgene and thionyl chloride (a CW precursor) are cleaner and more productive than their predecessors -- while using different precursors

We're on the eve of integrating microdevices into compact microplants that create "pocket" chemical plants that fit in a briefcase and cannot be monitored or detected.

Manufacturing efficiency gives rise to another arms race while illicit drug production morphs.

Trends in processing and manufacturing that will affect implementation of the Chemical Weapons Convention
George W. Parshall
Pure Appl. Chem., Vol. 74, No. 12, pp. 2259-2263, 2002

Microreactors. Prospects already achieved and possible misuse
Holger Löwe, Volker Hessel, and Andreas Mueller
Pure Appl. Chem., Vol. 74, No. 12, pp. 2271-2276, 2002

Gordon Housworth

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Bayat versus independent franchise: Zarqawi pledges allegiance to bin Laden


We announce that Al-Tawhid wal Jihad [Unity and Holy War], its emir [Zarqawi] and soldiers have pledged allegiance to the mujahedeen [holy fighters] Osama bin Laden.

With this oath of bayat, Zarqawi has publicly recast a jihadist franchise that had come to rival bin Laden himself. Competition has transcended cooperation to subservience. Non-Muslims need background to understand the power of bayat in Sufi based movements such as Egypt's Islamic Brotherhood and al Qaeda, and Wahhabis for that matter. (Sufism interestingly started as a Shia movement but has retreated there even as it rose among the Sunnis):

Bayat ("taking hand") is sanctioned by "Verily, those who give thee their allegiance, they give it but to Allah Himself" Quran 48:10. It is the initiation ceremony specific to many Sufi Orders. The Prophet Muhammad established this ceremony when he allowed his trusted companions to take his hand and commit themselves to vastly increase their love and loyalty to Allah and the Messenger: this is directly referred to in the Qur'an. Most Sufi Orders still practices some form of this sacred ceremony as a sacramental reenactment of the initiation offered by Prophet Muhammad to his companions. During the "taking hand" ceremony, the new dervish receives the blessings of the lineage, and a promise of spiritual protection along their life's journey.

Members of al-Qaeda take bayat [an oath of allegiance] to their sheik, Bin Laden, as an act of initiation. Al-Qaeda is a secret society without acclamation or public bayat to him. Bayat, the Arabic word for an oath of loyalty, means religious fealty or the submission more than personal allegiance. It means the link between the one making bayat, the shaykh and Prophet Muhammad (saws) is unbroken. This makes a Sufi connection possible during the solemn moment of taking bayat (pact) with the shaykh, who is the link in the chain - it connects to the chain and you become a recipient of the light of Muhammad (saws). Bayat is the ritual of accepting the shaykh as guide and coming under the protection of the lineage of the order.

Now the issue is why and why now? How can Zarqawi suddenly call bin Laden "the best leader for Islam's armies against all infidels and apostates"?

  • Bin Laden is dead or near-death and bayat now is all upside with an opportunity to formally inherit the "cloak of Muhammad"
  • Zarqawi has suffered attrition and needs to boost morale attract more jihadis
  • US pressure on Fallujah to expel Zarqawi may be having an effect (this time)
  • New strictures from being formerly declared a terrorist organization (it took so long?)

And for al Qaeda:

  • Bin Laden is dead or near-death and al Qaeda needs an heir
  • Provide a flanking maneuver to al Qaeda forces under assault in northern Pakistan
  • Claim Zarqawi's victories as its own (which often go to Ansar al-Islam)

The importance of Zarqawi's unilateral about face begs explanation:

Zarqawi has taken pains to distinguish himself from al Qaeda. Zarqawi never pledged the bayat, the oath of allegiance, to bin Laden. He has links to at least three terrorist groups and runs his own, Attawhid Wal Jihad (Unity and Jihad), or simply al Tawhid. Shadi Abdallah, a Jordanian terrorist imprisoned in Germany, told his German interrogators in 2002 that Zarqawi was "against al Qaeda." The main disagreement between bin Laden and Zarqawi seems to be over strategy. While al Qaeda targets the "far enemy," the United States, Zarqawi focuses his rage on "near enemies" such as Syria, Jordan, and Israel... In January 2004 Iraqi Kurds captured a letter from Zarqawi to bin Laden proposing closer ties between their organizations. Zarqawi offered bin Laden a chance to join him in the gathering jihad, attaining victory through a sectarian war, by "drag[ging] the Shia into the battle." Bin Laden appears to have rejected Zarqawi's petition, possibly because of a disagreement over the efficacy of targeting a "near enemy," or perhaps over the wisdom of targeting the Shia and provoking an Islamic civil war. Bin Laden favors tactical cooperation with Shia militant groups while Zarqawi's wrath towards the Shia, whose "damage is worse and more destructive to the [Islamic] nation than the Americans," is extreme.

Zarqawi spun it differently:

Sheikh Abu Mussab al-Zarqawi was in contact with the brothers within Al-Qaeda for eight months. They exchanged points of view and then there was a cut due to fate," the statement read. Suddenly contacts were restored. Our brothers in Al-Qaeda understood the strategy of Al-Tawhid wal Jihad group in the Land of the Two Rivers (Euphrates and Tigris) and were satisfied with our line. With the start of Ramadan, the month of victories and a time when Muslims need more than ever to close ranks, to gouge out the eyes of the enemies of Islam ..., we announce this good news to our nation, to the joy of Muslims.

Bears watching as it was not chance.

Zarqawi Movement Pledges Allegiance to Bin Laden
Muslim American Society
October 18, 2004

Gordon Housworth

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A global Islamic network linked by France and close to China


Prediction: A global Islamic network uniting Muslim nations, linked by the communications and nascent commerce channels of al-Jazeera, powered by the infrastructure tools of France, the Jackal Nation, and allied with China in diplomacy and economic power against the US.

Caught your breath yet? Rarely am I handed the elements of forecast as I was the three citations below, all published the same day by Hong Kong's Asia Times, one of those excellent but largely unread, or under-read, papers by US readers, especially when it comes to "Southwest Asian politics [that] are so thinly, slowly, and sporadically reported in the high street news of the US and Europe (bit better in Europe but not substantially better)."

In fact, Muslim nations strain noted that when "Malaysian Prime Minister Abdullah Badawi called for the creation of a global Islamic network last week, the story went uncovered in the Western media in general and the United States in particular, the nation that ultimately could be affected most by such a move." I wonder how we can persist while being so ignorant. The answer that I do not like, but which I often accord to underperforming firms, is that they live at the courtesy of their competitors.

Muslims have in recent centuries blamed exogenous forces for their plight rather than themselves, a condition which al Qaeda has exploited, but now Abdullah says that "greater cooperation between Muslim countries is the key to lifting them out of poverty and changing the image of Islamic nations,... that Western nations have no real interest in improving the lot of the world's Muslims" and of course Abdullah would like to vie for the position of "leader of an Islamic development movement."

Consider the usual claims that global trading and financial systems are "corrupt and unfair" and that Organization of Islamic Conference (OIC) is powerless in multilateral negotiations in the light of the Iraqi war and the GWOT which:

have already been perceived as anti-Muslim in many parts of the world. US foreign policy has been conducted with a callousness and ignorance of long-term ramifications that is damaging its credibility throughout the Muslim world; the failure of the current administration to understand the motivations and exigencies of Muslim nations is seen as symptomatic of the unbridgeable gap between the West and Islam.

Much of the influence of the US in the past has come from "soft power" rather than military might. Soft power is the principle that a nation's ideals, customs and government exert a certain gravitas abroad. Nations have looked to the US as a shining example of democracy, freedom and the good life. One need look no further than the Malaysian flag to see this influence; its 13 red and white stripes on a blue field are modeled on the United States' banner.

How far we have fallen and how great the success of al Qaeda despite how many of their number we kill. Abdullah's business network, incorporating Islamic business principles, is a gradual but "direct threat to the long-term interests of the United States and its status as the world's only superpower."

Whereas the League of Arab States are "all standing on tables fighting with one another," Qatari-based al-Jazeera, a marketing franchise built by conflict in Palestine and Iraq, "is one entity that everyone across the Arab world watches. They may be the only remaining base of Arab nationalism that exists. Arabs are proud of that."

While "Arab ruling elites [have] imported a development model based on economic growth, but have taken care to empty it of its progressive substance," al-Jazeera, launched in 1996, has played "a leading role" in "liberalizing Arab political culture [and] now rivals giants such as Cable News Network (CNN) and the British Broadcasting Corp, particularly in the Arab world." Think of marrying Amazon's product distribution capability with that franchise. Despite US distaste for al-Jazeera, I would do just that. If we don't the French will.

Christopher Hitchens has previously referred to Chirac as a jackal and in a Tim Russert CNBC interview on 16 Oct 2004 with Graydon Carter, referred to France as a Jackal Nation. France has continued to cultivate Arab relations in opposition to US interests, has the appropriate telecom and communication infrastructure, employs standards that are already in use across the region, and will strike more lucrative deals, personal and governmental, than will the US.

Susilo Bambang Yudhoyono, or SBY, Indonesia's first president chosen through direct elections and a devout Muslim, will be pressed by the US for an "immediate and unpopular dogmatism of the "crusade" on terror, whereas he can bask in the "long-term pragmatism and shared understanding" of a China that can offer "near-equal economic incentives" and also sees international terrorism as a lesser threat in the face of "long embedded, regionally popular secessionist groups."

We must make an about face or prepare to face the music.

Muslim nations strain at US business leash
By Keith Andrew Bettinger
Asia Times
Oct 14, 2004

Arab nationalism tunes into al-Jazeera
By Thalif Deen
Asia Times
Oct 14, 2004

SBY through Chinese eyes
By Jeffrey Robertson
Asia Times
Oct 14, 2004

Gordon Housworth

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